Stocks set to tumble at open after payrolls data

By IBT Staff Reporter On 06/03/11 AT 9:08 AM

Stock index futures pointed to a drop of more than 1 percent at the open on Friday after a dismal report on the labor market appeared to confirm recent data signaling the economy recovery was weakening.

U.S. employment rose by 54,000 in May, far less than expected, to record its weakest reading since September, while the jobless rate rose to 9.1 percent.

It goes right in line we've been every other report we've been getting for the last two months. In one sense, you shouldn't be that surprised it's a weak number. I'm just surprised that it is as weak as it is. 54,000 jobs is a really weak number, 54,000 is off the cliff, said Ken Polcari, managing director at ICAP Equities in New York.

Futures broke through 1,300. Now, psychologically, we are through 1,300, so 1,280 becomes much more of a reality.

After closing at its highest level since June 2008 on April 29, the S&P 500 has dropped 3.7 percent.

S&P 500 futures tumbled 16.6 points and were well below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures slid 140 points, and Nasdaq 100 futures lost 25.5 points.

Other data set for release include May's U.S. ISM non-manufacturing index at 10 a.m. EDT <1400 GMT>, which is likely to provide further evidence on the pace of recovery in the world's largest economy. Economists looked for a reading of 54 versus the prior month's 52.8.

Recent economic data, such as regional manufacturing data, has pointed to a slowing economy, although some analysts believe the data indicates the recovery has hit a soft patch.

Newell Rubbermaid Inc tumbled 10 percent to $15.31 in premarket trading after the storage container maker cut its earnings and sales forecast for the year, and said second-quarter results will fall short of estimates.

Hackers broke into Sony Corp's <6758.T> computer networks and stole information about more than 1 million customers, further exposing the vulnerability of the electronics giant's systems.